Montenegrin parties seal government pact, PM expected next week

BELGRADE (Reuters) - Montenegro's Democratic Party of Socialists, in power for more than two decades, sealed a coalition deal on Tuesday to govern for the next four years and steer the ex-Yugoslav republic through EU accession talks.

The DPS, in coalition with the Social Democratic Party, won a parliamentary election on October 14 but fell short of an outright majority for the first time in 11 years, its support dented by voters' frustration over economic stagnation and corruption.

The allies signed a deal with Bosniak (Muslim), Albanian and Croatian minority parties, keeping the DPS at the helm as the tiny Adriatic republic begins EU accession talks, formally launched in late June before a snap election was called.

The new parliament convened on Tuesday for the first time since the election. The president has 30 days to nominate a prime minister, who will then propose a cabinet to parliament.

The position of prime minister remains open.

DPS leader Milo Djukanovic, the dominant figure in Montenegro since the collapse of federal Yugoslavia in 1991, has not ruled out taking the post, which he vacated in 2009.

"We will discuss the question of who will be prime minister within our newly-formed coalition," Djukanovic told reporters after signing the coalition agreement. "I expect that decision next week."

Few doubt that Djukanovic will continue to hold the reins of power whether he takes the post or not. He led the country of 680,000 to independence in 2006 when it narrowly voted to end a state union with Serbia.

Under Tuesday's deal, the coalition would control 44 of the assembly's 81 seats. The opposition Democratic Front is the next biggest bloc with 20 seats.

The new government will face pressure from the EU to get serious about rooting out organized crime and corruption, which has flourished since Yugoslavia's bloody collapse in the 1990s.

It must also work hard to revive an economy projected to grow just 0.5 percent this year, having boomed after independence on the back of tourism and foreign investment.